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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
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Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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Paying tax on a real estate transaction without paying the social secu

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My next question - thank you in advance!
I earned about $4500 on a real estate transaction outside of my regular job as a teacher. Can I claim the income on my return, pay the taxes and not send in the social security form/payment? I have done this before. Who checks this? Social security? I don't really want to cheat them, but I don't have enough money now to pay the social security and medicare tax too.

Thanks again,
Kar

Can you? certainly - but the IRS computer is likely to kick it out if you received a 1099 that is designated "nonemployee compensation". At the very least it would give you some time - maybe as long as two years - but it will also cost you interest and, perhaps, penalties.


If you did not receive a 1099 or the one you received has the income in a box other than nonemployee compensation, you should not have anything worry about.


As a final note, you did not say what you did to"earn" this payment. If it was a "referral fee", it might not be subject to SE tax even if the nonemployee comp box is marked. If is was a commission, you need to see if you have some deductible expenses to offset against it. For example, real estate license fees, mileage, meals and entertainment, continuing ed, etc.


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Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
Jon Andrews and 2 other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: It was a referral fee to me (cause I still hold a license) from the new home subdivision where we bought.

Also, Jon, I did this way back in 1991 with a large amount and never paid social,etc. on it. Am I in trouble after all these years?
Customer: replied 11 years ago.
The one in 1992 was not a referral and was for other business.

The statute has run on 1991. If you reported the income, you should have no concerns.


If it was a one-time referral fee, I would be inclined to say that you are not "in business" and, therefore, it is not subject to SE. There is certainly the possibility that the IRS would disagree, but I think a defensible argument could be made.


jon

Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
Jon Andrews and 2 other Tax Specialists are ready to help you
Customer: replied 11 years ago.
What would I send to them so they would know it was a referral on the recent one? Sorry for all the questions and if you don't want to answer any more that is ok.

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